Asia-Pacific Update: Most Indexes Fall—with a Few Exceptions

Australia and New Zealand

Australia’s S&P ASX 200 was the best-performing index in the Asia-Pacific region on July 3. The index gained 0.59% on the day to end near its 12-year high at 6,685.5. A total of 116 stocks in the index gained, while 74 fell. While the consumer noncyclical, utilities, telecommunications, and mining sectors lifted the index, energy and healthcare dragged it down.

Stronger commodity prices provided the support to the index. Chinese iron ore futures sizzled, reaching a new high of $143.7. The rally in iron ore lifted BHP Group (BHP) and Rio Tinto (RIO) 0.1% and 0.6%, respectively, on the Australian Stock Exchange on July 3. BHP Group was up 0.27% on the NYSE in premarket trading at 7:23 AM ET. Rio Tinto was up 0.2% in premarket trading at 7:12 AM ET.

On the economic front, Australia’s trade balance rose 19% in May on a seasonally adjusted basis to 5.7 billion Australian dollars. The rise was primarily the result of exports rising faster than imports. Exports in May rose 4% to 41.6 billion Australian dollars, while imports grew 1% to 35.8 billion Australian dollars.

On July 2, the iShares MSCI Australia ETF (EWA) ended almost flat. With the ASX 200 surging, we may see marginal gains in the Australia-focused ETF.

New Zealand’s NZX 50 clocked a 0.12% gain.

Japan

Japan’s Nikkei 225 lost 0.53% on July 3, as most sectors except utilities tumbled. Fifty-seven stocks in the index gained, while 163 retreated. Toyota Motor (TM) fell 0.92%, while Honda Motor Company (HMC) fell 1.66%. Both these automakers are also listed in the US and are part of the iShares MSCI Japan ETF (EWJ). Toyota accounts for 4.15% of the ETF, while Honda accounts for 1.23%.

On July 2, EWJ gained 0.31%. We may see this ETF under pressure on July 3.

South Korea

South Korea’s KOSPI was the biggest loser among major Asian indexes on July 3 with a 1.23% loss. South Korea has cut this year’s growth projection to its lowest level in seven years as the US-China trade war continues to hurt the economy. The government now expects the economy to grow at a rate of 2.4%–2.5% in 2019. Trade issues with Japan also weighed heavily on the stocks of South Korean tech giants Samsung and SK Hynix, which fell 1.84% and 3.22%, respectively, on the Seoul Stock Exchange on July 3. Both companies are part of the iShares MSCI South Korea ETF (EWY).

On July 2, EWY fell 0.74% on the NYSE. Expect the ETF to be under pressure on July 3, as Samsung and SK Hynix account for 28% of its holdings.

Other Asian indexes

India’s S&P BSE Sensex and Nifty 50 closed flat on July 3. After opening higher and reaching a daily high, the S&P BSE Sensex retreated in late trading. The NSE Nifty 50 followed the same trajectory. Infosys (INFY) and Wipro (WIT) fell 1.18% and 0.49%, respectively, in a wider tech sell-off.

The Taiwan Capitalization Weighted Index fell 1.12% on July 3 as the technology sector emerged as the biggest loser. Taiwan Semiconductor Manufacturing (TSM), which is also listed in the US, lost 2.61% on the Taipei Exchange. TSM is the biggest component of the iShares MSCI Taiwan ETF (EWT) with a 21.5% share. We expect EWT to be under pressure on July 3 after closing flat yesterday.